An econometric analysis of the demand for beef in Japan

Abstract

This study is a quantitative analysis of Japanese beef consumption and prices. It is primarily concerned with the economic analysis of expected changes in domestic prices as a result of changes in imports which Japan could initiate in the near future. In a qualitative framework, an effort was also made to relate the impact of these findings to the Australian beef export sector. Japan is the only country in the Far East which has achieved a per capita income level and rate of economic growth comparable to the developed countries of the West. However, Japan's per capita beef consumption of 7 pounds in 1971 was among the lowest in the world. More detailed information on Japanese beef demand could indicate the nature of future beef and feed grain prices and trade flows useful to countries of the Far East and around the Pacific area. A simultaneous econometric model was estimated to account for the interdependence of the beef, pork, and poultry sector. All data were obtained from secondary sources of publications issued by Japanese and United States agencies. The lack of data and other basis information prevented an economic examination of the relationship of beef and fish consumption. The estimation of the structural parameters was utilized for obtaining both informational results and deriving a reduced form model. The latter was used for predictive purposes and to account for the direct and indirect impacts of the system on the demand for beef. Barring adverse economic or political circumstances, the structural parameters revealed that the Japanese demand for beef could continue to grow. Within the meat group itself, beef seems to be a more preferred protein source. The income effect appears quite favorable to beef demand as it reflects both purchasing power and tastes. However, its full impact was partially weakened by the prevailing high price level. At present consumption levels and price ranges, changes in wholesale prices appear relatively inflexible with respect to changes in quantity consumed and income. Predictions on future price movements indicate that the direction of price changes will be primarily determined by the magnitude of future import quotas and continuation of growth in real income. Expected changes in Japanese import quotas primarily imply liberalized imports. This would exert pressure on Australian export prices and further increase production capacity prospects.